DoT has increased reserve prices for 900MHz spectrum at 27% premium to TRAI recommended prices on average. In our view, there will be only four viable bidders in the upcoming auctions ? Bharti Airtel (Airtel), Vodafone, Idea Cellular (Idea) and Reliance Jio (RJio). We
believe that RJio is unlikely to be aggressive in 900MHz given their publicly stated policy of being primarily a data provider (4G), as well as non participation in 900MHz in the last auctions.
We expect both Airtel and Idea to be able to successfully renew the spectrum they want, similar to in February 2014 auctions. We believe that both companies have sufficient financial headroom (in terms of covenants) to fund the upcoming auctions. Given the market leaders acquired sufficient spectrum in the previous auctions, we expect auctions to be rational.
